I’m not talking about buying a McDonald franchise… or staring a manufacturing business… I’m talking about how much money do you need to start a services business.
I have a friend who wants to start a marketing and PR business. He is talking about getting funding to get up and running.
What he could do is approach angel investors (VCs would have no reason to talk to him), and get money to have a location, a staff, and pay for marketing material, memberships, his own salary and health benefits, and other stuff he needs to get started… OR, he could just put on his nicest clothes, hit the street, and find his first client who pays him money.
I call this option funding through sales. While it seems contrary to what the Silicon Valley trend has been, which is to get as much funding as you possibly could, I think funding through sales is a brilliant way to start your own business.
Now, taking off the rose-colored glasses, I’ll be the first to tell you that funding through sales is not necessarily the easiest, or fastest, way to success (and feeling peace of mind), and even paying your bills. In other words, it can be really hard to fund your business through sales.
In the early days of JibberJobber, I decided to not spend the six to twelve months looking for investors, and spent those six to twelve months working on my business, and working to increase revenue. It was very hard, but I was also working on a product model, not a services (like consulting) model.
My message, though, is that business is really quite simple. You have a service, which might be your time + your knowledge, and you find someone or some company who wants to pay you for that. Then, you spend your time, and share your knowledge, and they give you money. More succinctly, you provide supply to meet their demand. You don’t need to get a fancy car, or buy a new wardrobe, or even have any glossies printed out… you just need your time and your knowledge. And they just need to pay you.
When I started JibberJobber I had a friend who I met at the local job search club. He started a consulting business the same week I started JibberJobber. His income, within weeks, was over $10k/month. Mine was inching it’s way up to about $100/month. Again, mine was a product, his was consulting. Many times I wondered if I should have done some consulting just to float my company for a while. It would not have been a bad decision.
Want to start your own business? Don’t think you need to get a secretary and office space… you might have everything you need to get your first, and tenth, customer.
2 thoughts on “How much money do you need to start your new business?”
Thanks for this post! I really need to free my mind of all the layers of reasons why I can’t start my own consulting business. Very liberating.
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